NAME ROLL NO.

Bhavik Parmar 28
Sonu Pethani 32
Harsh Sanghavi 34
Shashank Pai 26
Vaishali Rawal 36
Dharmik Patel 30

3
 WHAT IS BOND MARKET ?

The bond market is a financial market where participants buy and sell
debt securities , usually in the form of bonds.
The bond market primarily includes:-
I) Government-issued securities.
II) Corporate debt securities.

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 MEANING OF 'INTERNATIONAL BOND'
A bond issued in a country or currency other than that of the investor or
broker. They include Eurobonds, which are issued in a foreign currency,
foreign bonds, which are issued by a foreign government or corporation in
the domestic market, and global bonds, which are issued in both domestic
and international markets.

INTERNATIONAL BOND IS FURTHER CLASSIFIED

IN THREE TYPES
1) Domestic Bond
2) Euro Bond
3) Foreign Bond
FEATURES OF INTERNATIONAL BOND

1) It is a debt market

2) It is a fund raising market

3) Fixed income instrument

4) Issued in foreign currency

5) It channelizing savings
THE COMMON PROCESS OF ISSUING BOND
Step 1:-A borrower will contact an investment banker.

Step 2:- The lead manager will invite other banks.

Step 3:-The managing group and banks will serve as underwriters for the
underwriter issues.

Step 4:-The various members of the underwriting syndicate receive a

portion of the spread.

Step 5:-The lead manager receives the full spread.

 INSTRUMENTS OF
INTERNATIONAL BOND MARKET
1) Straight Fixed-Rate

2) Floating-Rate Note

3) Convertible Bond

4) Straight Fixed-rate with equity warrants

5) Zero coupon bond

6) Dual-Currency bond
 RISK OF INVESTING IN BOND
1) Inflation Risk

2) Interest Rate Risk

3) Default Risk

4) Downgrade Risk

5) Liquidity Risk

6) Reinvestment Risk

7) Rip-off Risk
 ADVANTAGES & DISADVANTAGES
OF INTERNATIONAL BOND

Advantages Disadvantages

Diversify your portfolio Outperformed by Mutual Funds

International fund raising  Fees

instrument

Risk
Fixed income market

Limited Selection
Investment avenue(short term as
well as long term)
CHARACTERISTICS OF INTERNATIONAL
BOND MARKET INSTRUMENTS
Instruments Frequency of Size of Interest Pay off at
Interest payment payment Maturity
Straight Fixed-Rate Annual Fixed Currency of issue

Floating-Rate Note Quarterly or Semi- Variable Currency of issue

annual
Convertible Bond Annual Fixed Currency of issue or
conversion to equity
share
Straight Fixed-rate Annual Fixed Currency of issue
with equity warrants plus equity shares
from exercised
warrants
Zero coupon bond None Zero Currency of issue

Dual-Currency bond Annual Fixed Dual currency

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 INTERNATIONAL BOND AMOUNTS
OUTSTANDING BY MAJOR INSTRUMENTS

INSTRUMENTS Dec. 2008 Dec. 2009 March 2010

Straight fixed-rate 14428.4 17274.2 17235.9

Floating-rate note 7892.0 8357.2 7988.8

Straight fixed-rate with equity 396.7 447.2 446.1

warrants

Total 22717.1 26078.6 25670.8

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 INTERNATIONAL BOND AMOUNTS
OUTSTANDING BY MAJOR ISSURES

ISSURES Dec. 2008 Dec. 2009 March 2010

Financial Institutions 17,925.70 20,030.10 19,531.10

Governments 1,794.60 2,232.20 2,254.40

International Organizations 637.90 791.50 814.10

Corporate Issuers 2,359.00 3,024.70 3,071.20

Total 22717.20 26078.50 25670.80

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 INTERNATIONAL BOND AMOUNTS
OUTSTANDING BY MAJOR CURRENCIES
CURRENCIES Dec. 2008 Dec. 2009 March 2010

Euro 10873.9 12387.6 11813.8

US Dollar 8215.1 9429.0 9718.1

Pound Sterling 1701.8 2145.5 2028.3

Yen 746.7 693.9 668.7

Other 1179.7 1422.5 1441.9

Total 22717.2 26078.5 25670.8

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 WHAT IS DOMESTIC BOND
Bonds help acquire orders and, in many cases, are a precondition for
successful conclusion of a contract.
For all entrepreneurs planning to enter tenders and conclude
contracts for the delivery of goods or services we offer a wide range
of domestic contract bonds.

MEANING OF DOMESTIC BOND

Bonds issued in the country and currency in which they are traded.
Unlike international bonds, domestic bonds are not subject
to currency risk. They usually carry less risk, as the regulatory and
taxation requirements are usually known to investors in domestic
bonds, or at least to their brokers and accountants.
 TYPES OF DOMESTIC BOND

Public Sector Undertaking Bonds

Corporate Bonds

Financial Institutions and Banks

Emerging Bond Markets

Tax-Savings Bonds
 WHAT IS EUROBOND ?

A euro bond is a debt contract between a borrower and an

investor, which records the borrower's obligation to pay interest
and the principal amount of the bond on specified dates.

For -A firm issuing Yen bonds outside Japan . When a

Japanese firm issues yen bonds in the Euro market.
THE PROCEDURE FOR THE EUROBOND

1) Select a Lead Manager:- The borrower chooses one investment bank

to be the lead manager of the bond issue.

1) Organize a Syndicate:- The lead manager negotiates with other banks

to form managing group. This group then negotiates the terms of the
bond issue with the borrower.

2) Selling the Bonds:-Once the syndicate is formed and the terms of the
issue are agreed upon, the managing group buys the bonds from the
borrower. The managing group then sells the euro bonds to the
underwriters.

3) Principal Paying Agent:-A agent or trustee may also be appointed by

the borrower to handle the paperwork and legal aspects of the euro
bond issue and act as principal agent.
 UNIQUE CHARACTERISTICS OF
EUROBOND

1) Coupon (The Interest Rate)

2) Maturity
3) Issuer
4) Secondary Market
5) Ratings
6) Taxation
7) A Eurobond is only for Medium and Long-term
ADVANTAGES & DISADVANTAGES FOR
COMPANIES TO ISSUE EUROBONDS
Advantages Disadvantages
Large amounts There are issue costs to take
into account.

Freedom and Flexibility

If the debt is not matched firm

Lower cost of issue
may have to be open to foreign
exchange risk.
Lower interest cost

Longer maturities
 ADVANTAGES & DISADVANTAGES FOR
INVESTOR TO ISSUE EUROBONDS

Advantages Disadvantages

Tax free income Not a good idea for investors who

may need a repayment.

Low Risk investment

Convertible to Equity
There is always the risk defaulter.

Liquid investment
INTRODUCTUON ON FOREIGN BOND

Foreign bonds are regulated by the domestic market authorities and are
usually given nicknames that refer to the domestic market in which they
are being offered.

A foreign bond allows an investor a measure of international

diversification without subjection to the risk of changes in relative
currency values.
 DISTINCTION
Foreign Bond market
-Foreign government or
corporation or international
institution US-SEC-Register
-Local currency
- -
Typically US $50-500 Millions
-Bearer expect , in Bulldog and
Yankee markets
-As in
corresponding domestic market
-Foreign stock exchange
-Domestic and overseas
Euro Bond market
-Any borrower with credit
standing explicit rating rate
-Any widely used by
international country
Typically US $50-500 Millions
-Bearer
-Annual for fixed
rate bond and quarterly for FRN’s
-Usually London Luxembourg
-Wide international profile.
Private individual play a major role
www.wikipidia.com
www.Google.com
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Global Capital Markets TY.BFM – Vipul
Foreign exchange market TY.BFM- Vipul